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AP7 successful in 'London Whale' class-action lawsuit

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Sweden’s AP7 fund and its co-lead plaintiffs have reached a $150m (€138m) settlement with JP Morgan Chase, ending a 2012 securities class action over the trading and risk management activities at the heart of what has become known as the London Whale trading scandal.

AP7, the government-backed default option for the premium pension system in Sweden, was lead plaintiff alongside US public pension funds from the states of Arkansas, Ohio and Oregon.

Together, they have agreed to settle the class action for $150m in cash.

Richard Gröttheim, chief executive at AP7, who oversaw the litigation on behalf of the scheme, said: “The settlement represents an excellent recovery for the class after more than three years of litigation.

“AP7’s involvement in this matter illustrates its continued commitment to represent the interests of investors.” 

The settlement marks the end of a six-month mediation process and years of litigation, including the court’s certification of a class of investors.

The case was initially filed in a New York district court in July 2012.

The lead plaintiffs were appointed a month later and in April 2013 filed the complaint on which the mediation was based.

The complaint alleged JP Morgan violated federal securities law by making false and misleading statements about the activities of its CIO and the extent of the risk posed by the so-called London Whale trades within the CIO’s synthetic credit portfolio.

The complaint claimed these ultimately caused damage to investors.

Carried out by a trader called Bruno Iksil, nicknamed the London Whale because of the size of his positions, the trades led to more than $6bn in losses for the US investment bank and nearly $1bn in fines from US and UK regulators.

The Ohio state joint-lead plaintiff was the Public Employees Retirement System (OPERS).

One of Sweden’s five buffer funds, AP1, recently announced that it was stepping down as lead plaintiff in a consolidated lawsuit against practices in so-called dark pools. 

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